Horton v. Tyree
| Decision Date | 04 October 1927 |
| Docket Number | 6035. |
| Parties | HORTON v. TYREE. |
| Court | West Virginia Supreme Court |
Submitted September 14, 1927.
Petition for Rehearing Denied November 1, 1927.
Syllabus by the Court.
Where one person induces another to enter into a contract by false representations, which he is in a situation to know, and which it is his duty to know, are untrue, he, in con templation of law, does know the statements to be untrue, and, consequently, they are held to be fraudulent and the person injured has a remedy for the loss sustained by an action for damages. It is not indispensable to a recovery that the defendant actually knew them to be false.
An instruction based upon a fraudulent representation of fact is good, although it contains an additional representation which may be in effect a mere opinion and tells the jury that they are to believe both representations before the plaintiff can recover.
It is not necessary that the fraudulent representations complained of should be the sole consideration or inducement moving the plaintiff. If the representations contributed to the formation of the conclusion in the plaintiff's mind, that is enough, although a written agreement, which was executed at the time of the purchase, to take plaintiff's stock at the end of 90 days at a certain price, also operated in bringing him to the same determination.
Considering the issues and the evidence in this case, and that the jury were instructed to take into consideration the interest of any witness in the result of the suit; his bias or prejudice if any be shown; his demeanor upon the witness stand; and to give to his evidence such weight as they believe it entitled to, it was not error for which the case will be reversed to refuse to give an instruction, at defendant's instance to the effect that, if the jury believed that any person willfully testified falsely as to any material fact, they have a right to disregard all the testimony of such witness so testifying falsely, or to give his testimony, or any part thereof, such weight only as in their opinion the same may be entitled to.
In this case evidence of the general good character of the defendant for honesty and integrity is inadmissible. The character of the transaction must be ascertained by its own circumstances, and not the character of the parties.
As a general rule evidence of the subsequent acts and dealings of a person charged with fraud is admissible, if it tend to establish the fraud charged, or as a circumstance to show fraudulent intent.
It was not error to admit in evidence a record of the receivership action, in which the property purchased by the plaintiff was sold, to show the final disposition of the property.
Error to Circuit Court, Mercer County.
Action by E. W. Horton against E. T. Tyree. Judgment setting aside a verdict for plaintiff and awarding a new trial, and plaintiff brings error. Reversed, verdict reinstated, and judgment entered for plaintiff.
Russell S. Ritz and George Richardson, Jr., both of Bluefield, for plaintiff in error.
Strother, Sale, Curd & Tucker, of Welch, and W. E. Ross and French, Easley & Easley, all of Bluefield, for defendant in error.
On a former appeal in this case, we held that the declaration stated a good cause of action for an action of trespass on the case to recover damages sustained in the purchase of coal stock, at the instance and on the false and fraudulent representations of the defendant. Horton v. Tyree, 102 W.Va. 475, 135 S.E. 597. The grounds and facts upon which the case was predicated were therein set out at length in the opinion of the court, making further recital thereof unnecessary here. The case was tried to a jury, resulting in a verdict for the plaintiff. This verdict on motion of the defendant was set aside by the court and a new trial awarded. The plaintiff challenges the correctness of this action by the present appeal. The major errors assigned are that the court erred (1) by setting aside the verdict, and (2) in refusing to render judgment in favor of the plaintiff against the defendant on said verdict.
The issues involved were sharply drawn by the instructions submitting the case to the jury. At the instance of the plaintiff the jury were told in instruction No. 3, if they believed from the evidence in the case that the plaintiff subscribed for and became the purchaser of the 89 shares of capital stock of the Mountain State Coal Corporation, from C. T. Benton at the price of $8,900, and believed further from the evidence that in the negotiations leading up to the purchase of said stock the defendant, Tyree, in substance represented and stated to the plaintiff that said stock was a good buy; that the engineer's reports on the property showed it to be worth six for one, and if they believed said statements and representations were false, and that the plaintiff believed them to be true and relied thereon, and on account thereof was induced and led to subscribe for and become the purchaser thereof, then the plaintiff was entitled to recover from the defendant the difference between what the stock was actually worth at the time of the purchase and the amount which the plaintiff paid thereof, together with interest thereon to date. The vice of this instruction, maintains the defendant, is that it fails to state that the defendant knew his representations were false at the time of his making them, or that they were made by him with reckless disregard of the truth.
This question has been settled in this court by numerous adjudications. These cases announce the rule to be that one to whom a representation has been made as an inducement to enter into a contract has the right to rely upon it as true quoad the maker and need make no further inquiry. If he does so rely upon it, and it turns out to be untrue, and he is injured thereby, the party making the representation is liable for the damages, which may be recovered in an action of deceit. Hervey v. Crouch, 97 W.Va. 161, 124 S.E. 497; Osborne v. Holt, 92 W.Va. 410, 114 S.E. 801; Staker v. Reese, 82 W.Va. 764, 97 S.E. 641. The essential elements of such action, as announced in the Hervey Case, are: (1) That the act claimed to be fraudulent was the act of defendant or induced by him; (2) that it was material and false; that plaintiff relied upon it and was justified under the circumstances in relying upon it; and (3) that he was damaged because he relied upon it. Whether the defendant made the statement imputed to him, knowing it to be materially untrue, and for the fraudulent purpose of deceiving the plaintiff as charged in the declaration, we need not inquire, for it is not, in order to maintain this action, indispensable that the defendant be shown to have known the statement was false. For it is elementary doctrine that a false representation may be made scienter, so as to afford a right of action in damages, in contemplation of law, in any of the following ways: (1) With actual knowledge of its falsity; (2) without knowledge either of its truth or falsity; or (3) under circumstances in which the person making it ought to have known if he did not know of its falsity. State v. Berkeley, 41 W.Va. 458, 23 S.E. 608; 1 Bigelow, Frauds, 509. A representation in respect to a matter, with the intent to influence the conduct of another, implies necessarily the belief of the party making it that the statement is true. If the fact be within his means of knowledge, and he have no knowledge of the fact, a jury would be authorized to believe that the statement was knowingly false. The question of whether the defendant should know the falsity of his representations was squarely met in Osborne v. Holt, supra. It was there held that one who represents that a certain condition exists with the expectation that another will act thereon, when in fact he has no knowledge and regard thereto, will be as liable to another who deals with him on the basis of such representation, should it turn out to be false, as though he knew of the falsity thereof at the time it was made. "He is under a duty to know," said the court, citing in support thereof the decided cases of Stout v. Martin, 87 W.Va. 1, 104 S.E. 157; James v. Piggott, 70 W.Va. 435, 74 S.E. 667; Tolley v. Poteet, 62 W.Va. 231, 57 S.E. 811; Crislip v. Cain, 19 W.Va. 438.
The defendant makes the further objection to the instruction that the plaintiff's right is based upon the supposed statement that the stock "was a good buy," as well as upon the statement that the investment "would pay a dividend of 25 per cent." The point made is that these quoted statements were opinions and not statements of fact. Ordinarily, this is true when men are dealing at arm's length, but there are exceptions to this rule, as where a seller misrepresents the quality or value of the thing sold to be other than it is, in some particulars, which the buyer has not equal means with himself of knowing. Camicia v Iafollo, 89 W.Va. 422, 109 S.E. 335; Vernon v. Keys, 12 East. 637; 20 Cyc. p. 58, and cases cited in notes 51 and 52. But, it is often a close question whether a statement or representation put forward by the seller to induce a purchase is a statement of fact or the mere expression of an opinion as a consideration of the decided cases amply show. The modern cases show a strong tendency to refuse to extend the rule further than it has been carried by previous decisions with respect to "dealer's talk"; the courts generally taking the view that a vendor guilty of a representation made with intent to deceive should not be heard to say...
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